Foreclosure-Gate: Feds and States May Take 4 More Months to Complete Whitewash

04-20-2011 • Bloomberg.com

Virginia Attorney General Kenneth Cuccinelli and six other Republican attorneys general assailed the proposal as overreaching, with four calling principal reduction a “moral hazard.” “You’re declaring in advance who the winners and losers are,” Georgia Attorney General Sam Olens said in an interview yesterday. “I’m a little concerned that this process disengages the normal market forces.” Oklahoma Plan Oklahoma Attorney General Scott Pruitt is seeking an alternative settlement with banks that respects “the appropriate role of attorneys general,” his office said in a statement today. The settlement could be a model for other states, Pruitt said. The six-month probe by the states was triggered by claims of faulty foreclosure practices following the housing collapse, which state officials said may violate their laws. Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller, a Democrat who leads the investigation, said in an interview that the states haven’t presented a dollar figure to the banks, declining further comment. Another person familiar with the talks said state negotiators are discussing what form a financial component may take, and that there will be no settlement without a monetary payment. The person, who declined to be identified because the talks are private, said it may take four months to reach a deal.